Legal expenses insurance is a way of protecting yourself against some of the costs involved in a legal dispute, which can be very expensive.
There are two basic types of legal expenses insurance: before the event; and after the event.
Before the event
This type of legal expenses cover often provides for legal advice helplines, as well as the costs of appointing solicitors, expert witnesses and representation should the claim go to court.
If you have decided that you want this type of cover, it is always worth first checking your motor or contents insurance policies as you may already have this cover written into your insurance, or be able to add it for an additional cost.
Do be aware that you will not be covered for any legal costs relating to a dispute, or cause of a dispute, that began before you took out or added the cover.
Legal expenses cover under a motor policy will only apply to legal proceedings in connection with motoring, whereas cover under a contents insurance policy may apply to a range of legal proceedings (such as home ownership, boundary disputes etc). You will need to check the type of disputes that a policy covers before deciding which one to purchase or looking for a standalone policy.
You should also check your policy documents carefully to make sure you understand what you are covered for, the level of cover and any limitations that apply. For example, the policy may only cover claims which are reported to the insurer within a set number of days of the event which led to the claim.
Always contact your insurer before choosing a lawyer and incurring any legal costs.
The policy will have many terms and conditions so check the limit for costs payable. Another typical condition will be that the insurer can withdraw funding if there is not a 'reasonable prospect of success', which usually means that it assesses your case as having a 50% or less chance of winning or successfully defending your case.
After the event
This type of legal expenses insurance is taken out at the time that you seek legal assistance - so after the event leading to the dispute has happened. Most often you will arrange this type of cover through your solicitor, but there are specialist brokers that sell it too.
This type of cover costs a lot more than ‘before the event’ cover, and covers only a single legal dispute.
The condition allowing the insurer to withdraw funding if there is no longer a ‘reasonable prospect of success’ also usually applies.
You can sometimes arrange with the legal firm to defer paying the premium until your case has been settled. You need to make sure that you discuss your insurance needs with your lawyer before deciding whether the cover is right for you.